The rules say that Mecatol Rex cannot be annexed. This is detailed in the Strategy Cards section under the Diplomacy card description in the TI3 Book of Rules. It doesn't specify types of annexation, and the word is neither capitalized nor between quotations. The only specifier is the section where the rule is included. Only the context seems to suggest that it may be referring specifically to executing the Secondary Ability of Diplomacy. I went to the FAQ for clarification, and the closest ruling I saw is that this card does remove the Custodians on Mecatol Rex, but it doesn't go on to say that Mecatol Rex then changes from Neutral Status to belonging to the player using Voluntary Annexation--of course, half of us think this should be assumed, and the others think that we shouldn't assume what isn't written. It's a legitimate impasse.
We're split down the middle. Some of think that the rule book is clear that Mecatol cannot be annexed. Others think that the passage in the FAQ indicates that the card can be played on Mecatol, and that the special rules listed in that instance are there to clarify what to do with a Neutral System containing Neutral Units.